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Et Tu, Morgan Stanley?

It's a palace revolt at Morgan Stanley.

Shakespeare's Julius Caesar starts with an ominous warning from a soothsayer who shouts at Caesar: "Beware the Ides of March." Of course, Caesar should have taken that day off.

Morgan Stanley's (NYSE:MWD) CEO, Philip Purcell, has had similar warnings. But he's continued to do what most powerful leaders do: consolidate power.

On Monday, Purcell named two new co-presidents, Stephen Crawford and Zoe Cruz, which undercut the power of Stephan Newhouse, who was the president. Within a few days, the president of institutional securities, Vikram Pandit, and the head of institutional equities, John Havens, left the firm.

Then, yesterday, a group of retired Morgan Stanley executives (now called the Group of Eight), including the former chairman, wrote a letter to the board of Morgan Stanley. The message was clear: The "overriding cause of the Firm's poor performance is a failure of leadership by Philip Purcell as the Firm's CEO."

Purcell's big problem is that he was a cheerleader for Morgan Stanley's merger with Dean Witter, Discover & Co. in 1997. At the time, the deal was heralded as a way to even out the volatility of the investment banking business with retail brokerage and credit cards.

But now, as M&A and IPOs make a comeback, the retail brokerage and credit card segments look more like drags.

The Group of Eight hired its own investment banker, the legendary Robert Greenhill, a Morgan Stanley alumnus who now has his own fast-growing investment bank, Greenhill & Co.(NYSE:GHL). They must have also hired an aggressive PR firm. There has already been a full-page advertisement in The Wall Street Journal and an appearance on CNBC.

But the biggest potential problem is that Purcell must deal with the fact that calls for his departure may not be limited to departed management. Morgan Stanley's stock price has increased from $53.61 to $57.25 during the past several days. That may be interpreted one of two ways: Investors view the prospect of Purcell's departure favorably, or they like his recent shuffling of managerial ranks. I'm guessing it's the former.

While it appears that Purcell has loyalists on the board, this may not mean much. After all, in the past few months, we've seen powerful CEOs lose their jobs in quick fashion, such as AIG's (NYSE:AIG) Hank Greenberg.

But we should probably not feel too sorry for Purcell, who made about $22 million last year. If he loses, he will not suffer the fate of Caesar but will have a very big payday instead.

Fool contributor Tom Taulli does not own shares mentioned in this article.